Pay and Practice: Semi-Permanent SGR Repeal?

by David Pittman David Pittman,Washington Correspondent, MedPage Today
January 27, 2014

WASHINGTON -- It sounds like an oxymoron -- semi-permanent repeal -- but some former Medicare administrators are suggesting it as a solution to permanently repealing Medicare's much-hated sustainable growth rate (SGR) payment formula.

Their idea is a 5-year SGR suspension, which fits somewhere in between familiar 1-year patches and a permanent repeal Congress is working toward now. Essentially, the idea is to take the 10-year SGR repeal legislation that various congressional committees are working on now and implement only the first 5 years.

A 5-year suspension of SGR would be cheaper for Congress to finance as opposed to a permanent repeal, said Mark McClellan, MD, PhD, who ran the Centers for Medicare and Medicaid Services (CMS) from 2004 to 2006. A repeal is considered permanent if it's funded for at least 10 years.

Cost has been one of the biggest barriers for lawmakers as they work to overhaul the way Medicare pays physicians. For example, the Congressional Budget Office said Friday that the Senate Finance Committee's bill to totally repeal the SGR and replace it with a system that rewards physicians for practicing in alternative payment models would cost more than $150 billion.

Gail Wilensky, PhD, who ran the Medicare program from 1990 to 1992, noted that a 5-year suspension would also allow some of the alternative payment models to percolate before Congress pushes America's doctors toward them.

Some of those models -- like accountable care organizations -- are fairly new, and the way they work for different specialists is still being learned. Furthermore, the quality metrics doctors would be judged by are also being refined.

"You could do the first steps of what all of the legislation does, which is provide a known piece of stability for several years and put in place some specific activities to try to move forward with performance metrics," Wilensky, now a senior fellow at Project Hope in Bethesda, Md., said at the briefing. "In that 5-year window, you could decide on the metrics that are appropriate going forward."

Of course, a 5-year suspension could also been seen as another punt on the thorny issue and is predicated on Congress coming back and permanently killing the SGR. That may be a risky proposition given the difficulties Washington lawmakers have had passing legislation.

Pay and Practice is a blog by David Pittman for readers with an interest in health policy.

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